Trade Receipt by branch in India on behalf of Foreign Head Office

[Bakul Gandhi]

A foreign company undertook consultancy work for a Govt Company. It then opened a branch office i India and obtained PAN. The Govt company made payment to Indian branch in Rupees and deducted tax at source.  Is this in compliance of FEMA/RBI guidelines?

 

[CA Rachit Agarwal]

In our opinion receipt at the Indian Branch invoiling payment in Indian Rupees would not involve the compliance of RBI/FEMA.

AI Summary

Branch receipt in Indian rupees for consultancy services does not trigger RBI/FEMA compliance, per professional opinion. A foreign company carried out consultancy, opened an Indian branch and obtained PAN; the government company paid the branch in Indian rupees and deducted tax at source. The respondent's opinion states that receipt at the Indian branch invoicing and accepting payment in Indian rupees would not involve compliance under FEMA/RBI regulations.